Hawaii is cancelling a 35% tax credit for solar projects that are five megawatts or larger in size and that have power purchase agreements that must be approved by the public utilities commission.

The repeal is effective retroactively to tax years beginning after 2019.

However, it does not apply to two types of projects.

Projects whose power purchase agreements were approved or were awaiting approval by the commission before December 31, 2019 can still claim a tax credit.

Solar projects that are coupled with hydroelectric pumped-storage systems have until the end of 2021 to apply for approval and claim tax credits.

The tax credit amount is capped at $500,000 per megawatt of capacity.

The Hawaii governor signed the bill in mid-September. The repeal is a cost-cutting measure.